Business optimism climbs as two-speed economy emerges - Azets - Business Plus
Economic optimism among Irish businesses continued to climb in the second quarter, even as a widening gap emerges between larger enterprises and strugglingsmaller firms, according toAzets Ireland. The Q2 Azets. . .
Economic optimism among Irish businesses continued to climb in the second quarter, even as a widening gap emerges between larger enterprises and strugglingsmaller firms, according toAzets Ireland. The Q2 Azets Barometer shows the optimism increased to an average of 7. 2 out of 10 compared to 6. 9 in the previous quarter, 5. 7 six months ago and 5. 1 in the UK. However, the survey of 156 firms across Ireland shows larger companies are driving the recovery in sentiment while smaller businesses with 10-49 employees recorded an economic outlook of 5. 5. Those smaller companies are shown to have less of a financial buffer, weaker pricing power and fewer resources to invest. The gap between larger and smaller organisations has widened this quarter with only around half (50%) of smaller firms expressing optimism about their outlook. Financial performance among Irish firms also strengthened, rising to 7. 6 out of 10, up from 7. 1 in the previous quarter and comfortably above the six-country average of 7. 3. The hospitality and leisure sector was the most upbeat on financial performance, followed by the information and communications technology sector. Smaller firms again trailed, however, recording a financial performance score of 6. 5. The Azets Barometer shows a notable shift in the concerns facing Irish businesses, with economic uncertainty cited by 71% followed by inflation (67%) and cybersecurity (67%). The findings show that volatility will become the norm rather than the exception for business leaders. When asked which pressures are having the greatest impact on their business, cost pressures topped the list for Irish firms (22%), level with regulatory and tax changes (22%), followed by workforce challenges (18%). Although concerns around geopolitical uncertainty easing, it is reshaping how businesses across the surveyed markets operate, invest, and compete. Across the survey, two-thirds (65%) of leaders say geopolitical uncertainty has created financial pressure on their business, and 65% are actively restructuring their supply chains in response to geopolitical risk. More than six in ten (62%) also report that geopolitical shifts have created new commercial opportunities for their organisation. Irish businesses are planning for growth over the year ahead, with 82% expecting an increase in their use of automation and AI tools, 74% anticipating an increase in turnover and revenue, and 70% expecting an increase in profit. “Economic uncertainty and rising interest rates are the clouds gathering on the horizon for Irish businesses, and their position at the top of the list of concerns tells us that leaders are bracing for a potentially more challenging autumn and winter ahead," said Neil Hughes, CEO of Azets Ireland. "Volatility is no longer a temporary disruption, it is the new normal, and businesses are having to build the muscle to plan and invest with confidence despite it. Pictured in Dublin marking the announcement are from left Donal Maher, Director, Outsource Finance; Neil Hughes, Azets Ireland CEO; and David Rowe, Director and Founder, Outsource Finance. Pic:Naoise Culhane-no fee“As the Government prepares for Budget 2027, it has an opportunity to place these businesses at the heart of long-term economic planning and rebalancing. "SMEs employ around two-thirds of the workforce and are critical to driving sustainable growth, regional development and national competitiveness. Policies that enable them to invest, innovate and scale will strengthen the resilience of the wider economy. "Photo: Neil Hughes, CEO of Azets Ireland. (Pic: File)Sign up to The Business Plus Panel to help shape the business decisions of tomorrow and win vouchers for your opinions!